In its recent Truckload Freight Index covering the period to September 4th, Morgan Stanley reported continued “sequential improvement.” The Truckload Freight Index measures incremental truckload demand vs. incremental supply.
The recent report noted these are the highest level for the year, even on a seasonally adjusted basis. Back-to-school/Labor Day sales provide a boost, said Morgan Stanley, but sustainability uncertain. “Recent strength in our index is consistent with improving demand trends across freight. However, we worry that while truckload demand is clearly improving, much of the recent improvement is attributable to seasonal strength from back-to-school shopping and the Labor Day holiday rather than a significant improvement in fundamentals.”
On a seasonally-adjusted basis, the pace of sequential improvement in the index moderated over the past two weeks, said Morgan Stanley. Fourth-quarter seasonality may also vary from historical norms (and disappoint early on) if retailers choose not to build inventories ahead of an uncertain peak season, the analysts cautioned. The good news for carriers is that retail inventories are now normalized or below-normal, and any uptick in retail demand is translating over into greater truckload demand.
Summing up, the analysts said, “We have become incrementally more upbeat on truckload given improving freight demand trends. Recent trends suggest year-on-year improvement in our index could materialize by mid fourth quarter, and we expect to hear more upbeat commentary on the supply-demand balance at upcoming conferences."